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El-Erian’s Six Rules For Running Your Portfolio (The Reformed Broker)
PIMCO’S CEO Mohamed El-Erian spoke at the PIMCO 2013 NYC Investment Summit New York. El-Erian gave his rules on how investors should run their portfolio. Josh Brown sums it up.
1. “Protect yourself against the haircuts that come from not-strong balance sheets, weak income statements and bad management.” 2. “Don’t give up all of your liquidity just to be ‘in.'” 3. Manage your risks. Just diversifying is not good enough. 4. ” Be reasonable about your return expectations.” 5. “Beware backward-looking labels.” There was a time when peripheral European countries were considered to have interest rate risk, not credit risk because they were developed countries, while emerging countries like Brazil and China were seen to have credit risk. This no longer holds true. 6. “Be Resilient and Agile. The world is changing.”
Why Brian Belski Is Sticking With S&P 500 1,575 (BMO Capital Markets)
The recent stock market rally has seen analysts hiking up their S&P 500 targets. Brian Belski at BMO Capital Markets however is sticking with 1,575. Here’s why: “Over the past 12 months, we have gone from defending our bullish stance with price targets at one point well above both market levels and consensus expectations to reconciling near-term caution. To be frank, we believe forecasts should be defined by analysis and process. And yes, we enjoy rising stock prices. However, we believe too many investors are currently expecting higher stock prices tomorrow just because they were higher today. As such, our model is telling us that stocks are well ahead of both fundamentals and macros. Therefore, the inputs of our model need to markedly improve for us to change our conclusions.”
Despite the blow to gold prices this year, Citi’s Tom Fitzpatrick writes that on a “medium-to-long-term basis” he is very bullish on the precious metal. And this he says is because of fundamentals.
“As can be seen from the chart [below], Gold has never stayed below that “stairway to hell” for very long,” he wrote referring to the statutory debt limit. “Given that the debt limit number is going to continue higher, a re-emergence of Gold strength looks inevitable. A lot of “considered opinion” suggests that by the end of the present electoral term (end of 2016 when new presidential elections take place), that the US debt limit will be at around $22 trillion USD.”
How To Help Clients Ride Out Market Volatility (The Wall Street Journal)
During times of tremendous market volatility many investors panic and sell low. Dan Crimmins of Crimmins Wealth Management told the Wall Street Journal that he had a two-part plan to help clients learn to understand and accept risk. First, he went over their investment policy statements to help the clients “understand how their investments will help them meet their goals,” according to the WSJ. Second, he took them through a “fire drill”. To do this he showed them how long typical bear markets run, how much the market falls. “I wanted to make them understand that this is very normal,” he told the WSJ.
AIG Owned Advisor Group Announces Lay-Offs (Investment News)
Broker-dealer Advisor Group announced lay offs this week that affected under 5% of its workforce. Advisor Group is operated by AIG and has four broker-dealers, namely, Arizona-based SagePoint Financial, New York-based Royal Alliance, Georgia-based FSC Securities Corporation, and Minnesota-based Woodbury Financial Services. Most of the layoffs are reported to have come from Woodbury Financial Services.
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